The European Commission and US CFTC claim to have agreed on a common approach for swaps contracts so that there can be a greater uptake of trade on electronic platforms to aid transparency and minimize risk. With credit default swaps and interest swaps at the heart of the matter for the 2007-09 financial crisis, implementation of double compliance for banks and businesses have increased the option and desirability for them to trade elsewhere in the world.
Just this past week, the two commissions issued a statement on having made significant progress towards harmonizing trading rules. With an aim to seek for global convergence in rules, EU financial services chief Michael Bernier supports the goals of harmonization. With the introduction in the US of SEFs that come into effect this month, the equivalent in the EU, known as organized trading facilities (OTFs), is not slated to come into effect until the end of 2016.
The agreement announced last week seeks to cover the gap between the two implementation timelines. Nonetheless, some remaining issues include whether or not the EU will allow US clearing houses to serve European customers.